ECB’s QE can’t, alone, lift the eurozone’s recovery

The “asset purchase program (QE) can do little to lift long-term growth,” Benoît Cœuré, Member of the Executive Board of the ECB, told Greek daily Kathimerini. The QE “can engineer a cyclical recovery, not a long-lasting one,” Coeuré added because “long-term growth is (mainly) driven by the capacity to innovate and to efficiently allocate capital and labor, which hinges on reforms undertaken by governments,” he stressed. After what he described as a “very complex and demanding environment” in 2014, Vitor Constancio, Vice-President of the ECB, affirmed the ECB’s “policies are working and the economic recovery is becoming self-sustained.”

Like Coeuré, Constancio stressed on the need for prompted structural reforms, adding that if “monetary policy can (…) accelerate the transition to a sustainable growth trajectory, (…) it cannot lift that trajectory.” Summing up, both reforms and business-favorable policies are crucial to EU’s economic recovery. They are “key for strengthening the resilience and ensuring the smooth functioning of the Economic and Monetary Union (EMU) and for supporting growth at the global level,” Mario Draghi, President of the ECB, explained.

One can deduct that there is a common and simultaneous effort by top ECB’s officials to remind the States that their roles remain central to economic growth and that the ECB, whatever its QE program, can’t do everything by itself. Their public statements also highlighted a closer stance than usually thought between the ECB and German Chancellor Angela Merkel according to whom no reforms means no lasting solution.